Trump Just Lost 12–0 to the Fed Chair He Picked #trump #federalreserve #inflation
リアクション
2026年09月17日
On Wednesday the Federal Open Market Committee raised the federal funds rate by a quarter point, to 3.75%–4.00%. It was the first increase since 2023, and the vote was unanimous: 12–0.
Kevin Warsh was sworn in as Fed chairman in May, nominated by President Trump to replace Jerome Powell, and Wall Street has spent most of this year trading on the assumption that a Trump-appointed chair would deliver cuts. In the run-up to this meeting the president, the vice president, the Treasury secretary and a senior White House economic counselor all publicly urged the Fed not to raise. Trump's response afterward was that American interest rates "should be 1%, or less." He also said he retains confidence in Warsh.
Most of the coverage is filing this as a fight over Federal Reserve independence. We think the more useful document is the August CPI report.
Headline inflation is running at 3.4%. Core inflation — everything except food and energy, which is the part the funds rate actually governs — is 2.4% and fell from 2.5% the month before. Core goods, the category where tariffs show up most directly, rose 0.7% over the entire year. Now the other column of the same table: the energy index is up 16.3% over twelve months, gasoline 27.4%, fuel oil 52.0%. In August alone, gasoline accounted for more than a third of the monthly increase in the all-items index.
That is not the price profile of an economy with a monetary problem. It is the price profile of an economy absorbing an energy shock.
Warsh said as much from the podium: "We cannot affect any individual price," citing oil and groceries. What the Fed can do, he said, is prevent a change in relative prices from broadening out into second- and third-order effects. That is a meaningful thing to do. It is also not a cure. It is a firebreak — and the fire was set somewhere else.
This episode makes a structural argument: the instruments currently setting American prices are a naval blockade, a war around the Strait of Hormuz, and a tariff schedule. All three sit inside the executive branch. The federal funds rate does not. A president demanding 1% is asking for relief from the one institution that did not cause the problem while retaining every lever that did.
We also look at the other half of the policy response. In August, Treasury Secretary Scott Bessent doubled the size of the department's long-dated debt buybacks, with a Treasury General Account approaching $1 trillion available behind it. On the day of the announcement the 30-year yield — the primary target of the operation — rose more than five basis points, and the initial rally in the 10-year was erased within a session. You cannot buy back a risk premium that policy is still manufacturing.
Kevin Warsh was sworn in as Fed chairman in May, nominated by President Trump to replace Jerome Powell, and Wall Street has spent most of this year trading on the assumption that a Trump-appointed chair would deliver cuts. In the run-up to this meeting the president, the vice president, the Treasury secretary and a senior White House economic counselor all publicly urged the Fed not to raise. Trump's response afterward was that American interest rates "should be 1%, or less." He also said he retains confidence in Warsh.
Most of the coverage is filing this as a fight over Federal Reserve independence. We think the more useful document is the August CPI report.
Headline inflation is running at 3.4%. Core inflation — everything except food and energy, which is the part the funds rate actually governs — is 2.4% and fell from 2.5% the month before. Core goods, the category where tariffs show up most directly, rose 0.7% over the entire year. Now the other column of the same table: the energy index is up 16.3% over twelve months, gasoline 27.4%, fuel oil 52.0%. In August alone, gasoline accounted for more than a third of the monthly increase in the all-items index.
That is not the price profile of an economy with a monetary problem. It is the price profile of an economy absorbing an energy shock.
Warsh said as much from the podium: "We cannot affect any individual price," citing oil and groceries. What the Fed can do, he said, is prevent a change in relative prices from broadening out into second- and third-order effects. That is a meaningful thing to do. It is also not a cure. It is a firebreak — and the fire was set somewhere else.
This episode makes a structural argument: the instruments currently setting American prices are a naval blockade, a war around the Strait of Hormuz, and a tariff schedule. All three sit inside the executive branch. The federal funds rate does not. A president demanding 1% is asking for relief from the one institution that did not cause the problem while retaining every lever that did.
We also look at the other half of the policy response. In August, Treasury Secretary Scott Bessent doubled the size of the department's long-dated debt buybacks, with a Treasury General Account approaching $1 trillion available behind it. On the day of the announcement the 30-year yield — the primary target of the operation — rose more than five basis points, and the initial rally in the 10-year was erased within a session. You cannot buy back a risk premium that policy is still manufacturing.
